Fourth Quarter Guidance
Q: Why is Q4 guidance conservative compared to current run rates?
A: Management explained that the fourth quarter is seasonally softer due to ship repositioning and the end of the more productive summer vacation period for North American school holidays. They expect the implied EBITDA margin for Q4 at the midpoint to be 11.9%, close to what was delivered in the first and second quarters. The guidance allows for potential promotional activities if needed during these repositionings.

Dividend Strategy
Q: How will you balance dividend growth with debt paydown?
A: They emphasized a balanced approach, comfortable carrying some debt with net debt well below 1 turn. They will allocate capital between share repurchases, debt paydown, and the newly announced dividend. Opportunities to grow the dividend exist, and interest rates will influence how aggressively they pay down debt.

Product Margin Expansion
Q: What are the drivers of product margin, and how high can it go?
A: Improvements in product margin are due to onboard initiatives and reduced discounting, not from Medi-Spa service attachments. Despite no longer owning Elemis, they have a long-term supply agreement with fixed costs. The biggest driver is continued productivity improvements.

Technology Enhancements
Q: Can you discuss tech enhancements and AI investments?
A: They have not rolled out any AI enhancements yet; these are still in early development stages. They're identifying opportunities onboard and in back-office operations. Current productivity gains are due to menu simplification and increased guest numbers.

Pre-Booking Opportunities
Q: What's the opportunity for increasing pre-booking penetration in 2025?
A: Pre-booking is expected to rise as they onboard more brands and enhance the pre-booking experience. Currently, pre-booking penetration is 23%. By providing more content and improving the journey, they believe pre-booking will move upwards.

Occupancy Levels
Q: Can increased occupancy drive growth beyond ship count?
A: Occupancies are back to historical levels, sometimes surpassing 100%, often due to additional children onboard who are not their target customers. Therefore, the marginal increment from higher occupancy is not significant for their services.

Spa Menu Pricing
Q: Is there room to raise spa menu prices above U.S. resort levels?
A: They benchmark pricing against high-end land-based resorts but remain value-oriented. There may be an opportunity to take further pricing in 2025 as part of the budgeting process.

E-commerce and Product Lines
Q: Any plans to expand product lines or e-commerce business?
A: They see no need to add new product lines, as Elemis's lineup suffices for growth. They continue to sell Elemis products online and are exploring ways to expand e-commerce, but nothing specific is planned currently.

Demographic Targeting
Q: How do different cruise demographics impact your business?
A: They adapt to various demographics across different cruise offerings. Royal Caribbean's strategy of offering family cruises (Icon) and shorter, party cruises (Utopia) is seen as smart. They have extensive experience handling various cruise types and don't foresee challenges.

Product Spend Trends
Q: How is product spend trending post-treatment?
A: Product and service demand remain very strong. Retail attachments are performing well, with room for improvement as they simplify menu choices, which promotes better retail attachment.